Software Development Outsourcing
Software Development Outsourcing: The Essence
Outsourcing is a proven method for companies to produce software at a cheaper cost and with less effort. Outsourcing software has the following advantages and disadvantages:
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Software development outsourcing adavantages
Reduced hiring efforts and costs.
Quick project start.
On-demand access to required resources.
Optimized managerial efforts.
Easy team scaling up and down.
Software development outsourcing disadvantages
Less control over the project.
The risk of communication gaps.
The risk of security breaches.
How to Set Up Software Development Outsourcing
The establishment of the outsourcing process might take anywhere from a few days to several months.
It depends on the outsourcing model you choose, the maturity of the vendor’s procedures, your preparation for such projects, and other factors.
Step 1. Decide whether to outsource
A feasibility analysis should be the first step in every software development outsourcing project. It could consist of the following steps:
Identifying the roadblocks in your current software development process.
Choosing which aspects of your software development project you want to outsource.
In-house vs. outsourced software development Total Cost of Ownership (TCO) comparison.
Selecting the fitting model of software outsourcing services:
Livyoung Realtech Recommends:
- The easiest project aspects to outsource are software maintenance and testing, while the most challenging are software requirements collecting and design.
- Make sure that software can be safely partitioned into discrete modules before outsourcing software coding.
Step 2. Select the software outsourcing company
When shortlisting potential vendors, consider the following factors:
A vendor's experience with outsourcing software development services is disclosed on their website, in case studies, and other places.
Third-party testimonies, reviews from independent research firms, and other examples of vendor collaboration are available.
Time zone differences, location (onshore, nearshore, offshore).
The proximity of language and culture.
The development infrastructure of a vendor (hardware, network, bandwidth, etc.).
Project management, quality management, and security management processes are all at different stages of maturity (e.g., proved by ISO 9001 and ISO 27001 certificates).
You must comply with all industry norms and laws (HIPAA, FDA, PCI DSS, etc.).
Pricing alternatives are available (fixed price, T&M).
Options for software maintenance and support are available.
Step 3. Set up the outsourcing process
When shortlisting potential vendors, consider the following factors:
Team augmentation
Send a request to the pre-selected vendor with the detailed skill set and FTE required.
Get CVs and rates of available staff.
Schedule interviews with potential hires.
(optionally) Arrange a test task for the potential outsourced experts.
Negotiate SLA, including penalties for security breaches.
Sign the contract.
Organize the knowledge transfer to outsourced resources.
Provide remote resources with access to the project infrastructure.
Negotiate communication channels between the outsourced staff and the rest of the project team.
Schedule to get weekly and/or monthly performance evaluation reports.
Dedicated team
Send a request to the pre-selected vendor and get the proposal with service options, development approaches, etc.
Send a request to the pre-selected vendor and get the proposal with service options, development approaches, etc.
Together with the vendor decide on KPIs to track the performance of the outsourced team.
Negotiate SLA, including penalties for security breaches.
Sign the contract.
Organize the knowledge transfer to the outsourced team.
Provide access to the project infrastructure to the remote team.
Decide on the convenient communication channels with the outsourced team.
Schedule to get weekly and/or monthly performance evaluation reports.
Full process outsourcing
Send a request to the pre-selected vendor.
Receive the proposal with basic estimates for a technical solution the vendor suggests (optionally), service options, development approaches, etc.
Get from the vendor: Analysis of all software development and support needs (based on application backlogs, business plans, input from IT departments and business departments), evaluation of the project scope.
Analysis of your current development and testing processes (if any).
A service delivery plan.
Negotiate SLA (it can include such KPIs as budget planned vs. budget spent, user satisfaction metrics, backlog waiting time expired, application reliability and security metrics).
Sign the contract.
Organize knowledge transfer to the vendor.
Check your vendor to set up the development process, implement CI/CD (if needed), integrate with development and deployment processes of other vendors (if needed).
Specifics of Software Development Outsourcing Models
Staff augmentation
Pros:
Easy resource scaling up and down to adapt to changing project needs.
Quick access to specific skills.
Direct supervision over the development process and team productivity.
1-2 weeks for onboarding (if the required resources are readily available in the vendor’s pool).
Cons:
Full responsibility for project-related risks is on your side.
Onboarding and managing efforts are on your side.
High risk of communication gaps and collaboration difficulties.
Dedicated team
Pros:
1-2 days to start (if the team is pre-assembled by a vendor and the team structure just needs to be reasonably adjusted to your project needs).
A vendor provides a Team Lead/PM to coordinate the work of the outsourced team so that they need little/no guidance from your side.
Cons:
Risks related to vendor selection.
Project team coordination and project risk management can be still partially on your side.
In a newly gathered team, people may underperform during the first 2-4 weeks until the group turns into a real team.
Full process outsourcing
Pros:
Minimum management efforts on your side.
Guaranteed quality of project deliverables and timeline alignment (with penalties for breaching them).
Access to a vendor’s established development processes.
Tackling project-related risks is on a vendor’s side.
Cons:
The longest setup (up to a month).
The highest vendor risks.
Software Development Outsourcing Costs
The software development outsourcing cost is defined by the following factors:
Outsourced resources are paid on an hourly basis. The cost varies a lot depending on where you outsource.
The output of a staff that has been outsourced.
The switch to a new outsourced provider (it is quite costly).
Factors that affect the cost of outsourcing a complete process include:
The vendor's outsourcing processes' maturity (mature project management and well-established development processes help avoid rework).
Specifics about the vendor's quality assurance methodology (proactive testing lowers QA costs while fixing bugs in production makes QA more expensive).
Livyoung Realtech’s Software Development Outsourcing Offering:
With experience of more than 15 years, Livyoung Realtech Enterprise provides flexible software development outsourcing services for businesses to deliver software solutions cost-effectively and fast.
Staff augmentation
Java,.NET, Python, Go, PHP, and more programming languages are used by developers and architects (including legacy and retiring languages).
Testers and test automation engineers, DevOps engineers, system and integration architects, data architects, data scientists, and support engineers are just a few of the positions that can be outsourced.
Terms of cooperation are flexible, ranging from one month to ten years.
The exact number of qualified specialists you require (from 0.5 full-time equivalent to 150+ full-time equivalent).
Terms of cooperation are flexible, ranging from one month to ten years.
Advanced technologies (AI, IoT, Big Data, VR, computer vision), modern architectures (cloud-native, serverless, microservices), and development methodologies (CI/CD, test automation), as well as industry-specific knowledge are required.
Dedicated team
Outsourced team ramp-up is quick (2 workdays – 2 weeks).
To manage distributed teams, experienced PMs and Team Leads are present.
Full support in developing a collaborative environment and monitoring project success.
Strict adherence to agreed-upon quality KPIs.
Easy to scale up or down as a team.
Due to our developers' high proficiency and utilization of best coding and time management methods, we can build 1.5-2x faster.
Due to the agile approach, CI/CD, and reuse of freely available components, project costs are reduced by 20 to 50 percent.
Full process outsourcing
A full-fledged Project Management Office (PMO) to manage projects of all sizes and scopes.
Manufacturing, retail, healthcare, logistics, professional services, telecommunications, and 24 other industries have industry-specific consultants to help bridge the gap between business and technology.
Taking ultimate responsibility for the 'how-to' element of the development project and defining the business and software development goals you wish to achieve.
Communication with each stakeholder is tailored.
Regular reporting and continuous granular monitoring of project progress.
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